Wells Fargo (NYSE:WFC) beat the Street on Tuesday with a 29% jump in second-quarter profits as the big lender continues to capitalize on better credit conditions.
The stronger-than-expected results stand in contrast to those posted on Tuesday by Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS). BofA suffered a huge loss of $8.8 billion and Goldmans profits missed expectations.
San Francisco-based Wells Fargo said it earned $3.95 billion, or 70 cents a share, last quarter, compared with a profit of $3.06 billion, or 55 cents a share, a year earlier. Analysts had called for EPS of 68 cents.
Revenue slid 4.7% to $20.4 billion, coming in just shy of the Streets view of $20.46 billion.
Our business fundamentals were strong with increased revenues, loans and deposits, lower operating costs, improved credit quality and higher capital levels, CEO John Stumpf said in a statement. While the economic recovery continues to be slower than expected, there are signs that businesses are investing for growth, and were here to help them.
Wells, which acquired Wachovia during the financial crisis, said its credit loss provisions tumbled to $1.84 billion last quarter, down from $3.99 billion a year earlier and $2.21 billion the previous quarter.
In another sign of the improving credit picture, Wells said its net charge-offs slid to 1.52% from 2.33% the year before. Nonperforming assets fell to $27.9 billion, off $2.6 billion from the prior quarter and $4.9 billion from the same period a year ago.
Wells said its average checking and savings deposits grew by 9% year-over-year, while consumer checking accounts gained 7% from the end of the second quarter of 2010.
Shares of Wells gained 1.79% to $27.37 Tuesday morning, trimming their 2011 loss to 13.3%. Wells helped lead an overall rally in the financial sector from stocks like Citigroup (NYSE:C).